Daschle's Duplicity

Be the tax dodges large or small, Thomas Daschle has loved them all.

Meghan Clyne

February 4, 2009 11:35 AM

At least Tom Daschle still has his friends. Hardly had the would-be Health and Human Services secretary exited stage left before his Washington defenders got to work. A former HHS secretary went on TV lauding Daschle as "honorable." Members of the Senate praised their former colleague as "a great leader" and "a class act." The president himself showed empathy and forgiveness, describing Daschle's failure to pay more than $130,000 in federal taxes as an "honest" and "unintentional mistake."

Really? Had these Daschle stalwarts paid attention to widely available press reports and public information dating back five years, they might have seen how these recent transgressions fit into a larger pattern of behavior. And they would have discovered a sad truth: Be the tax dodges large or small, Thomas Daschle has loved them all.

Rewind to autumn 2004, when Daschle's Senate re-election campaign was in full swing. I and others reported on an eyebrow-raising property-tax break Daschle and his wife, Linda, had been receiving on their Washington home. Located at 2830 Foxhall Road NW, the brick mansion has seven bedrooms, six-and-a-half bathrooms, four fireplaces, and a current assessed value of nearly $2.9 million.

When the Daschles bought the home for $1.9 million in April 2003, they filed for the District of Columbia's "homestead deduction" on their property taxes. To receive the break, Daschle had to affirm that the house met the eligibility standards under D.C. code--namely, that it was "the principal place of residence within the District of an individual, shareholder, or member, who is domiciled in the District."

In Washington the word "domiciled" has a particular meaning, defined by the Supreme Court in District of Columbia v. Murphy. According to the 1941 decision, "persons are domiciled here who live here and have no fixed and definite intent to return and make their homes where they were formerly domiciled."

Try to reconcile that with the laws of South Dakota, where Daschle was a resident, voter, and Senator. State code spells out clearly the criteria for determining voter residence: "For the purposes of this title, the term, residence, means the place in which a person has fixed his or her habitation and to which the person, whenever absent, intends to return. If a person moves to another state, or to any of the other territories, with the intention of making it his or her permanent home, the person thereby loses residence in this state."

Hardly the best situation to be in if you're trying to get re-elected to the Senate--especially given those pesky residency requirements in the Constitution: "No Person shall be a Senator who . . . shall not, when elected, be an Inhabitant of that State for which he shall be chosen."

Despite the contradictions, for months Daschle had his tax break and ate it too. For nearly a year and a half, he received the homestead deduction as a Washingtonian--and during that time, according to records on file with the Brown County Auditor, voted as a South Dakotan.

By fall 2004, however, something had changed--and Daschle stopped receiving the Washington property-tax break. Two employees of the D.C. Office of Tax and Revenue independently confirm that the homestead deduction was "retroactively reversed" to April 2003, the date the Daschles bought their home. According to the tax office, this means the home was never eligible to receive the deduction--and files show that the Daschles have, in their subsequent assessments, paid the back taxes.

The result of the "retroactive reversal" is that the Daschles' D.C. records show them as having, in effect, never taken a property-tax deduction to which they were not entitled. And they are now in the good graces of the District of Columbia Office of Tax and Revenue. Strangely enough, files show that the "retroactive reversal" that made this magic possible took place on September 29, 2004. It was the same day the tax office received a Freedom of Information Act request from a reporter sniffing around the story in the heat of Daschle's Senate campaign.

So five years ago, Tom Daschle conveniently avoided taxes until the non-payment put his career ambitions in danger. Then he took steps to make amends, pay the back taxes, and move on. Sound familiar?

On one hand, the 2004 mess is tiny compared to Daschle's current woes. Far from an attempt to pocket $130,000 owed to the feds, Daschle's D.C. homestead deduction saved him just under $300 (roughly the value of one-third of one square foot of his Foxhall mansion) in 2003. On the other hand, the 2004 episode suggests tax avoidance more determined and unscrupulous than his recent trip-up. Hardly an understandable error of omission, applying for the homestead deduction required Daschle to sign and affirm--under penalty of a $1,000 fine or 100 days' imprisonment for knowingly swearing to false information--that he was eligible for a tax break which, it turns out, he was not.

Those of us who have overpaid local levies fearing the wrath of the tax man curse the Daschle double-standard. Yet in a twist, it's a double-standard that may ultimately have served Daschle his just deserts. As his nomination sank, understandable questions were raised about the White House vetting process. A simple Google or Nexis search--usually a must for anyone being considered for mention in a presidential speech, let alone a Cabinet post--would have turned up the 2004 property-tax matter. (It would have been a useful clue, perhaps, for the people who are now so surprised by Daschle's "mistake.") If the Obama team had followed the Bush administration's practice of asking all nominees to undergo IRS background checks, anything as small as a late payment would have been flagged. And if the Obama people had just given Daschle their own vaunted seven-page questionnaire for prospective staff, it's unlikely Daschle's back taxes would have escaped notice.

Did Obama's vetters fail to subject Daschle to the same scrutiny they would apply to little people because of his Democratic star power and friends in high places? Or did they know Daschle had tax problems and figured he'd get away with it because of his Democratic star power and friends in high places? In either case, they forgot the perils of Cabinet nominees who come only with star power and friends in high places (see Kerik, Bernard).

President Obama promised to govern competently and transparently, and to be a 21st-century leader prepared to harness the power of the information age. The failure to uncover Daschle's years'-long record of tax avoidance begins to suggest otherwise. In light of Obama's two other tax-dodging nominees, his critics are starting to grow a little louder and little bolder. And unless the new president begins learning from these hard lessons, he may soon find himself quite unhappy in his own District of Columbia property--the 11-bedroom, 35-bathroom, 28-fireplace, $308 million mansion at 1600 Pennsylvania Avenue.